Questions for this paper were shifted to the end of the session, and therefore were not that direct (overshadowed by subsequent presentations). A clarification was requested about the concept of building “one wall at a time.” The reply was that this was meant figuratively. If a core structure is provided as one room, then the household should be able to add room by room.
Suitability for the book
This would make an interesting chapter, particularly if it is written as lively as it was presented. However at this stage it is merely a power-point presentation, and the question is whether the presenter has the time to prepare a written and referenced chapter. If so, one could request specifically that the reference to the Latin American, Asian and African housing finance schemes be expanded.
Low-income housing finance experience in sub-Saharan Africa – Cas Coovadia (Chairperson: African Union for Housing Finance)
The African Union for Housing Finance is the only continental housing finance body in Africa. The attempt is to make housing finance more relevant. This involves lobbying at the broad strategic level. Many African countries are in conflict, difficult to resolve. Many countries have not even begun to look at priorities, leadership, resources. Many have a macro-economic problems, fluctuating inflation rates. Many countries import most of their formal building materials, others have a weak system of tenure security. Also there is a limited capacity to deliver units. In terms of policy, the perception is that the poor should be left to their own devices. Within this African context, it must be appreciated what South Africa has achieved – the banks still cater for 90% of housing finance. In other countries, banks are non-existent, and housing finance is left to state-owned housing finance institutions, which are now collapsing, or to building societies, now out-dated.
The low income housing finance debate in Africa is only just starting. The presentation made mention of Mauritian, Ghanaian and Kenyan programmes. With the World Bank and USAID, the African Union on Housing Finance are focussing on informal settlements, with the premise that these need to be seen as assets, to be upgraded. The initiative is creating a data-base in different regions in Africa, of relevant information to be accessed by governments and financiers. The pilot in Gauteng was presented recently.
Alioune Badiane took great interest in the research effort mentioned, as this coincides with the current focus of the World Habitat Day (slums). He emphasised the need to share data, and was going to follow this up. He asked how his programme related to other initiatives such as the Global Shelter Facility and Shelter Afrique. The reply was that these programmes are interacting, also the African Development Bank.
Suitability for the book
This would be an interesting contribution to the book. But at this stage no paper exists (to my knowledge), and the presenter may not have the time to prepare a full length chapter.
Housing finance initiatives, achievements and constraints in Gauteng – Rory Gallogher (Department of Housing, Gauteng Provincial government)
This presentation took the position that the subsidised housing environment in South Africa skews the normal lending environment. To create a better quality environment, housing units need to cost at least R100 000. In the presenter’s view, to normalise, one needs to eventually get rid of the subsidy. Since 1994, low income housing finance has been mainly RDP subsidies. Risk is categorised as non-consumer risk and political risk. The debate as to who should carry the risk is continued in the Community Reinvestment Bill discussions. With reference to de Soto, the presenter argues that a one-dimensional subsidy creates “dead capital”, as the environment is uncompetitive and sterile. Further, the subsidy creates fiscal drag, chasing away potential consumers. In summary, the subsidy is an equitable social grant entitlement, not an instrument for urban renewal and integration.
This is in contrast to other funds, e.g. the Urban Renewal Fund, the Gauteng Partnership Fund (focusing on people earning less than R7 500). In his view, it is more effective to package finance on a project-by-project basis, rather than making partnerships at organisational level (though acknowledging the partnership with NURCHA). Another important aspect is the need for integrity of data on defaults, vacancies, turnover, cost, price of rentals.
The presentation then turned to the Brickfields housing project, detailing how the finance for this was packaged on a project basis, with Blue IQ and various other investors. This is seen as an example of moving away from the subsidy-only approach to a multi-dimensional funding approach.
It was commented that one should not consider doing away with the subsidy altogether, given the reality of household crises, particularly linked to HIV/AIDS, with increasing numbers of people being driven in to absolute poverty. But it needed to be considered how the subsidy could be better structured, to more effectively achieve integration. The presenter agreed that the subsidy is needed for the poorest, but not one-size-fits-all. His presentation focussed on the challenges of urban integration and on housing finance gaps.
Suitability for the book
This chapter presents an important case study of project-packaged housing finance. If I were to edit though, I would request some of the statements about the subsidy to be put in context. Also the Brickfields project was presented in very detailed tables. One would request that instead the essence of the finance partnership be spelt out, also with some background of the objectives of this project and its evolution. As yet this is only a power-point presentation (of which I don’t have a copy). Again the question as to whether the presenter will be in a position to prepare a chapter.
Payment for Municipal services – Trevor Ngwane (Anti-Privatisation Forum)
This presentation emphasised that basic services in South Africa remain a highly political issue. The Anti-Privatisation Forum was created to assist people to access basic services including shelter. Other new social movements have emerged – the Soweto Electricity Crisis Committee, the Durban Concerned Citizens, and in Cape Town the Anti-Eviction Campaign. A victory in October 2001 was that Eskom and government decided to end electricity cut-offs in Soweto (though still cutting off elsewhere). Research (HSRC and Wits) shows that up to 10 million people are affected by water cut-offs. In some municipalities, water and electricity are cut off together. In Johannesburg the intention is to attach properties, if payments are in arrears. Yet there is a disparity in terms of what the municipality spends in the suburbs as opposed to Soweto.
In the presenter’s view, the priorities of the South African government have shifted away from equality. Linking the services question to that of shelter, the presenter noted that housing requires water, waste removal, electricity, roads, clinics etc. In the history of disparity, non-payment for services led to bringing down apartheid. The current “culture of non-payment” is a myth. It is a culture of struggle against exploitation, against unequal access to basic services. Research in Soweto showed that most people are in fact paying. But since the idea of cost recovery/return on investment, people feel they are asked to cover the high cost of servicing the distant areas, where they did not choose to live. Under apartheid, services were charged at a flat rate. In the meantime, unemployment has gone up, the rich are getting richer, the income gap between blacks is increasing. A company like Alusaf pays less per kilo-litre of water than a grand mother in Soweto. Further, water cut-offs are unconstitutional. The demand is for free services for all, and 6 000 litre per household is not enough. Lastly, the shallow sewer system is not considered adequate.
This presentation triggered a lot of discussion. The HoD, Sibusiso Buthelezi, commented that pre-paid meters give the consumers better control over their budgets. His question was why the Anti-Privatisation Forum is so fundamentally opposed to this, when everyone agrees that its appropriate for telephones. Another question on payment of services was whether the perception is that government is ripping off the consumer, or whether the service delivery is inadequate.
In his reply, the presenter emphasised that privatisation, which was promoted a few years ago, had in fact failed, as was evident from the Nelspruit and the Dolphin Coast cases. Given the volatility of African markets, with less than 1% of foreign direct investment, of which 70% goes to South Africa, it is a pipe dream to believe that private banks will lend to municipalities. Victims of apartheid are asked to pay 2x for apartheid. Johannesburg wants to be considered a world-class city. London is a world-class city, yet prepaid meters are banned in London. With prepaid meters, there is no administrative justice. It is a matter of government being ripped off by capitalists, not government ripping off consumers. There is a need to return to the RDP and the Freedom Charter.